What constitutes appropriate and inappropriate care? Very often, the answer depends on whom you ask.

At two recent industry conferences, I had occasion to ask a different question: "How much inappropriate and unnecessary care is provided?" There, I found a consensus—many people thought it was "a lot." But when I countered with the question, "Have you ever sought care which you thought was inappropriate or unnecessary?" not a single hand went up.

Actually, when I think about it, I'm pretty sure I have received inappropriate care—but I only figured that out after the fact. When a physician told me that I needed this test or that treatment, I did what I was told without question. Noncompliance, I knew, was a sin. Only later did I wonder why the doctor prescribed an antibiotic, asked for another office visit, or scheduled more diagnostic tests.

Magnify that experience across the nation, and it's easy to see that this issue of inappropriate care—what is inapropriate and how to reduce it—is likely to become much more important.

We will continue to believe that costs are out of control. For the last 50 years, healthcare costs have grown more than twice as fast as the gross domestic product (GDP). But, with the costs of employer-provided insurance, Medicare, and Medicaid outpacing the economy, we have to figure out a way to pay for the services we're using. Perhaps economist Herb Klein said it best: "If a trend is unsustainable, it will end."

Survey Says: How to Lower the Healthcare Bill

It sounds obvious that the least painful way to slow the growth of healthcare costs is to cut down on inappropriate, unnecessary, wasteful, or marginal care, which some experts estimate may account for as much as 25 to 30 percent of all the money spent on healthcare in the United States. Arnold Relman, when he was editor of the New England Journal of Medicine, used to write that if we could eliminate all the unnecessary care in the United States, we could save enough money to insure all the uninsured, and then some.

Fifteen years ago, we thought we had the answer to this problem. It was called managed care. Using preauthorization and utilization reviews, we would "just say no" to inappropriate care. People who tried to do this were very unpopular and still have the scar tissue.

The latest silver bullet to cost management is consumer-driven health plans. Of course, these plans are not really consumer driven. They are employer driven, and they are ideologically driven by those who believe the US healthcare system is so expensive because most of the costs are born by employers, insurers, and the government. As a result, the thinking goes, the insured population uses too many medical services because they are almost "free." (This argument ignores the fact that, in Europe, Japan, and other countries where out-of-pocket costs are much smaller, healthcare accounts for a much lower percentage of GDP). Milton Friedman is one of the many advocates who believe that the solution to the nation's healthcare problem is to require patients to pay much more for their care and thereby take more responsibility for their health, their healthcare, and their healthcare costs—and that this would lead to a big cut in inappropriate care.

Others point to rising healthcare costs as a provider-driven problem and say that the way to contain costs is to reduce the supply of doctors. There is compelling evidence: Researchers Jack Wenberg, Elliott Fisher, and the Dartmouth Atlas project, for example, have documented the big differences in the utilization of medical services in different areas with more or less doctors and correlated that with little difference in health outcomes.